Q: Who would ben­e­fit most from a tax re­write?

Chicago Sun-Times - - NATION/ WORLD - Matthew Frankel The Mot­ley Fool Frankel owns shares of AXP and AAPL. The Mot­ley Fool owns shares of and rec­om­mends Ama­zon and AAPL. The Mot­ley Fool rec­om­mends CVS Health.

A: There are three main ways com­pa­nies could ben­e­fit from tax re­form.

If the cor­po­rate tax rate is re­duced, it could ben­e­fit com­pa­nies that cur­rently pay high ef­fec­tive tax rates. For ex­am­ple, South­west Air­lines gen­er­ates most of its sales in­side the U. S. and pays a 38% ef­fec­tive tax rate. CVS Health pays an ef­fec­tive tax rate of 39%. If the fed­eral tax rate were to be re­duced from 35% to 20% as is be­ing pro­posed, these compa- nies could be big win­ners.

An­other pos­si­ble ben­e­fit is from the pro­posed repa­tri­a­tion tax break. It cur­rently costs busi­nesses 35% to bring for­eign prof­its back home, and a tem­po­rar­ily low repa­tri­a­tion rate of 10% or so could be part of a tax re­form pack­age. This would help com­pa­nies such as Ap­ple and Mi­crosoft, which have nearly $ 400 bil­lion in overseas cash be­tween the two.

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